The Aave project can be considered as one of the leading protocols of decentralized finance (Defi). It is currently one of the most potential DeFi cryptocurrencies. Aave is now firmly in the top 5 DeFi protocols, accounting for around 9% of the total value recorded in DeFi.
It’s therefore reasonable to want to know more about this amazing altcoin. This article provides you with detailed information about Aave that will influence your investment decision.
What is Aave?
Aave is a decentralized finance ( DeFi ) project created to lend and borrow cryptocurrencies. Creditors receive interest in exchange, while debtors repay with interest. The entire loan process can be performed without contacting any intermediary, in an automatic and decentralized manner.
The protocol works on the Ethereum network and AAVE tokens use the Ethereum Blockchain for transactions. These transactions are based on ERC20 tokens.
The system is controlled by an independent decentralized organization known as the DAO, which in turn is managed by AAVE token holders.
AAVE is the token for the governance of the project. Investors holding Aave cryptocurrencies can review and vote on proposals affecting the entire project.
Market Cap considers the AAVE token to be DeFi’s largest coin. Ethereum investors can use AAVE to borrow and lend their cryptocurrencies in a decentralized way.
How does Aave work?
AAVE was initially called ETHLend but later the project wanted to deviate from Ethereum while using its Blockchain. At the base, there has always been the idea of providing a platform that would allow to offer and request cryptocurrency loans, without using intermediaries.
Loans can be obtained through a pool rather than with a single “lender”. The loan is subject to the payment of interest, which is based on the use of that cryptocurrency pool and the actual supply/demand of the loaned coin.
A high-interest rate can push liquidity providers to deposit more cryptocurrencies while using a high liquidity pool tends to lower the interest rate.
Another distinctive feature of Aave is the ability to deposit one cryptocurrency (as collateral) and borrow another one. However, the guarantee deposit must be higher than the loan requested.
The volatile nature of cryptocurrencies requires a liquidation process, which occurs when the guarantee provided is no longer sufficient to cover the loan obtained.
This means that you have to pay attention to the proportion between the deposit and the loan requested. If the quantities are very close, it is easy to get to the liquidation of the guarantee deposit. It is, therefore, preferable to deposit much more than you want to borrow, to avoid this procedure.
Savings in DeFi are somewhat similar to bank savings even though they are not yet perceived in the same way. Anyone who uses Decentralized Finance can lend a cryptocurrency and collect high interest.
The interest earned in this way is not comparable to that of traditional banks. Most traditional banks even hardly offer you any interest for saving your money. Even if they do, the interest you get will be quite low.
Contrariwise, Aave and DeFi allow you to obtain passive returns, simply by leaving cryptocurrencies in a pool available to users interested in borrowing them.
The DeFi protocol is developing day by day and therefore its adoption is growing as well. Currently, many users around the world are well aware of the possibilities offered by the Defi system(which Aave is a part of).
Hence, in the future, a huge increase in loans related to cryptocurrencies is expected. The increase in cryptocurrency loans will undoubtedly also benefit the listing of Aave on the market.
Aave current state of the market
According to CoinMarketCap, the AAVE price is $120.45 with a 24-hour trading volume of $143,028,380 at the time of writing. Additionally, AAVE is up 0.78℅ in the last 24 hours and it’s ranked #55 on CMC.
How to invest in Aave
Launched in September 2018, Aave has quickly achieved great popularity because it offers something indispensable in the business world – Loans.
If you want to buy Aave to speculate on the price changes of this cryptocurrency, you can either get it through cryptocurrency exchanges or CFD brokers.
Where to buy Aave
Binance is a major exchange that provides a very popular platform on the web. For years it has been considered the leader of exchanges.
The feature of this platform is to allow the user to make quick exchanges with maximum security. It applies very low fees that can be further lowered by 25% if you decide to buy Binance Coin (BNB), the cryptocurrency owned by the exchange. It has over 350 cryptocurrencies on the list and emerging projects are launched every week.
eToro is an intermediary spread all over the world, one of the most famous ever, which has exceeded the threshold of 20 million users registered on its trading platform.
Its offer is extremely wide, and is not limited to cryptocurrencies (such as exchanges) but also allows you to trade stocks, indices, forex, and commodities.
On eToro you can buy Aave directly, or trade it through CFDs, using leverage.
Coinbase allows customers to keep their cryptocurrencies and allows them to earn rewards for staking. Furthermore, it is one of the trading platforms that most cryptocurrencies at extremely competitive prices.
Kraken is a cryptocurrency exchange. It was founded in July 2011 and is headquartered in San Francisco, California. It is one of the exchanges with the largest trading volume. Its founder is Jesse Powell. The company raised more than $ 118 million in initial funding.
Aave (AAVE) contract address
Below are Aave (AAVE) contract address for various networks.
BNB Smart Chain (BEP20): 0xfb6115445bff7b52feb98650c87f44907e58f802
Avalanche C-Chain: 0x8ce2dee54bb9921a2ae0a63dbb2df8ed88b91dd9
Is Aave (AAVE) a good investment?
All the data and opinions collected lead us to think that buying Aave is very worthwhile, especially in a time of market downturn.
In the last few months, Aave has been on a bearish trend. But, according to crypto analysts, the trend should not discourage you. It should rather lead you to the search for optimal entry levels for a short or medium-term investment.
Aave rose impressively last year, marking + 919% in early 2021, taking the price to an all-time high of $707. For the rest of 2021, the price collapsed and then stabilized at levels much lower than the all-time high. With the following assumptions, you can decide whether or not Aave is a good investment:
- Based on previous trends, Aave is more unlikely to carry on for long in this bearish phase.
- Analysts believe it will approach historic highs again within this year.
- Most cryptocurrency prediction sites don’t think Aave will hit a new all-time high in 2022, but the odds are high that the price will exceed $500.
- Also, Wallet Investor(one of the most famous cryptocurrency analysts in the world) estimates that by 2025, Aave’s price will fluctuate between $ 839 and $ 1214.
Based on these speculations, I’ll say that Aave seems to be worth buying into.
DeFi creates an alternative way to earn passively and Aave is certainly one of the leading projects in this sector, which is set to grow rapidly.
The interest in DeFi and Aave, according to the major cryptocurrency experts, could also drag the price of the AAVE token up, offering enormous possibilities for speculation. Hence, it’s a promising crypto investment opportunity. However, remember that cryptocurrencies are highly volatile.
Note: Cryptocurrency investment is risky.